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Synopsis:
BofA anticipates a modest rise in both headline and core CPI for September, indicating firm core inflation without immediate cause for concern.
Key Points:
CPI Forecasts: BofA predicts a 0.1% m/m increase in headline CPI and a 0.3% m/m rise in core CPI. The anticipated decline in energy prices is expected to soften the headline print, while sticky rents and rising used car prices will contribute to a firmer core reading.
Year-over-Year Expectations: On a year-over-year basis, BofA expects the headline CPI to drop by two-tenths to 2.3%, with core CPI remaining stable at 3.2%. The headline NSA index is projected to print at 314.827.
Core PCE Implications: Based on these CPI forecasts and trends in inflation for PPI components of PCE, BofA projects core PCE inflation at 0.18% m/m. While this would be a positive result, it does not signal a drastic change in inflation dynamics that would influence the size of the next Fed rate cut.
Conclusion: BofA suggests that while inflation continues to trend in the right direction, the upcoming CPI report will likely not alter the Fed's course significantly. The findings support the potential for further rate cuts but do not warrant alarm regarding inflation levels at this time.
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Earlier:
- US inflation data is due this week - here are 14 investment bank forecasts
- Guggenheim CIO says inflation of up to 4% could be a new normal
